New bank locker rules: RBI extends deadline for banks to renew locker agreements

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The Reserve Bank of India (RBI) has announced that it has extended the deadline for banks to finish the process of renewing agreements for existing safe deposit locker customers in a phased manner by December 31, 2023. “It has come to the notice of RBI that a large number of customers are yet to sign the revised agreement. In many cases, the banks are yet to inform the customers about the need to do so before the stipulated date (January 1, 2023). Further, there is a need for revision in the Model Agreement drafted by the Indian Banks’ Association (IBA) to fully comply with the revised instructions,” RBI said in a notification on January 23, 2023.In light of the aforementioned factors, the deadline for banks is being gradually extended until December 31, 2023. By April 30, 2023, banks are advised to inform all their clients of the amended requirements. By June 30 and September 30, 2023, banks should make sure that at least 50% and 75% of their current customers have signed the revised agreements, stated the RBI.

Banks are recommended to take steps to make it easier for their customers to execute new or additional stamped agreements with them by setting up stamp papers, franking, electronic execution of agreements, e-stamping, etc. They should also give the customer a copy of the executed agreements.

According to the RBI notification, “Where operations in lockers have been suspended due to non-compliance with an agreement by January 1, 2023, they should be unfrozen immediately.”

The Reserve Bank of India released updated guidelines for the safe deposit locker/safe custody article facility in a circular dated August 18, 2021, which, among other things, requires banks to engage into updated contracts with the current locker holders by January 1, 2023 (the deadline which now stands extended).

“IBA is being advised separately to review and revise the Model Agreement to ensure that it complies with the requirements of circular dated August 18, 2021 and circulate a revised version to all banks by February 28, 2023. There may be instances, where the revised agreements already executed in pursuance of circular dated August 18, 2021 are at variance with this revised IBA Model Agreement. In such cases, all the provisions of the said circular of the RBI, in particular Part VII thereof on compensation policy/liability of banks, shall continue to apply to banks even if not explicitly stated in the agreements already executed. Further, in such cases, banks shall have the option to execute fresh agreements or revise them through supplementary agreements. The cost of stamp paper in such cases may be borne by the banks,” according to the latest RBI notification.

What is Locker Agreement
According to the PNB locker agreement policy, “At the time of allotment of the locker to a customer, the bank shall enter into an agreement with the customer to whom the locker facility is provided, on a paper duly stamped. A copy of the locker agreement in duplicate signed by both the parties shall be furnished to the locker- hirer to know his/her rights and responsibilities. Original Agreement shall be retained with the bank’s branch where the locker is situated”

The RBI announced the new guidelines via a notification on August 18, 2021.

Few of the new locker rules that came into effect on January 1, 2022.

SMS and email alerts about locker access
Before the end of the day, banks must send an email and SMS alert to the customer’s registered email address and mobile number as confirmation, informing them of the date, time, and potential recourse in the event of unauthorised locker access.

When the bank will compensate customers
Banks will be eligible to pay in case of any loss of locker content resulting from the bank’s negligence, according to the new RBI standards.

The RBI notification says: “It is the responsibility of banks to take all steps for the safety and security of the premises in which the safe deposit vaults are housed. It has the responsibility to ensure that incidents like fire, theft/ burglary/ robbery, dacoity, building collapse do not occur in the bank’s premises due to its own shortcomings, negligence and by any act of omission/commission. As banks cannot claim that they bear no liability towards their customers for loss of contents of the locker, in instances where loss of contents of locker are due to incidents mentioned above or attributable to fraud committed by its employee(s), the banks’ liability shall be for an amount equivalent to one hundred times the prevailing annual rent of the safe deposit locker.”

When the bank will not compensate
The bank will not be liable for any damage or loss of locker contents caused by natural calamities or acts of God such as earthquakes, floods, lightning, or thunderstorms, or any act attributable to the customer’s sole fault or negligence, according to the revised guidelines. Banks, on the other hand, must take reasonable precautions with their locker systems in order to secure their facilities from such disasters.

Banks will continue to accept term deposits in order to collect locker rent
In banks, it is common to practise to get a significantly higher term deposit than is required to recover the annual locker rental. The new guideline clarifies his stance.

“To ensure prompt payment of locker rent, banks are allowed to obtain a Term Deposit, at the time of allotment, which would cover three years’ rent and the charges for breaking open the locker in case of such eventuality. Banks, however, shall not insist on such Term Deposits from the existing locker holders or those who have satisfactory operative account. The packaging of allotment of locker facility with placement of term deposits beyond what is specifically permitted above will be considered.

Transfer of content if the account holder dies
If the sole locker hirer nominates an individual to receive the contents of the locker in the event of his death, the banks shall give such nominee access to the locker with the liberty to remove the contents after an inventory is taken in the prescribed manner, after verification of the death certificate and satisfying the identity and genuineness of such individual approached.

If the locker was hired jointly with instructions to operate it under joint signatures and the locker hirer(s) nominates any other individual(s), the bank shall give access to the locker and the liberty to remove the contents jointly to the survivor(s) and the nominee(s) after an inventory was taken in the prescribed manner in the event of death of any of the locker hirers.

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